Joined: Sep 2009
I always like to bring it back to the facts of Mr.SeriouslyWrong's favoritie economic theorist and theories. He cant escape these facts, only ignore them. Unbelieveable.
Have you have been able to research these facts?
Please explain. Thanks.
"In other words, Peter Schiff may be a classic case of a stopped clock: he's been predicting a market decline FOREVER and when the market has declined he's hailed as a genius by his cult fans."
Now, had you listened to Peter in 2002, 2003, 2004, 2005, 2006 or even 3/4 of 2007, you lost your shirt. Had you placed bets based on Schiff's market calls, you lost everything you wagered.
The S&P (.INX) went from 1054 in May of 2002 (the date of the interview) to 1561 in Oct. 2007, a 48% gain and the Dow (.DJI) rose 40%.
Banking stocks, the primary victim of the housing bust, went up (JP Morgan (JPM) 36%, Bank of America (BAC) 41%, Wells Fargo (WFC) 39% , Wachovia (WB) 31% and American Express (AXP) 51%) during that time frame (dividends excluded which would dramatically add to results).
Bottom line? Had you listened to Mr. Schiff at anytime before Oct. 2007, you lost...big. To those who did, there is little consolation in the praise being heaped on him today.
Milton Freidman said, "markets can stay dislocated longer than you can stay solvent." For those who bet with Schiff between 2002-2007, they know the statement well.
Why is it a big deal? After all, Berkshire's (BRK.A) Warren Buffett claims he cannot time the market and often watches share prices decline in investments (like recent investments in Goldman Sachs (GS) and GE) before a rebound. How is this any different?
For one, Warren's loss is limited to his investment. He buys 1 share of stock "a" at $25. $25 is the most he can lose.
Now, if we listen to Peter and "short" stock "a" at 25, our loss has no limit. If it goes to $100, we lose $75. In shorting, we are only limited in our upside. If "a" goes to zero, "Schiffers" profit $25.
Buffett's strategy is an investing one and Schiff's is a trading and timing one.
Buffett followers can hold their shares, collect their dividend and wait for the rebound. Schiff followers collect no dividend and watched for over 5 years as their bet went wrong. How many stuck around? How many shorted into every market drop or "presumed" top over 5 years, only repeatedly losing money as the market kept rising and Schiff kept pounding his message home?
Schiff should not be getting the praise he is getting today for being "so right" after saying the same thing and being "so wrong" for the previous 5 years.
Last edited by Havakasha; 04-24-2012 at 07:26 PM.
Joined: Sep 2009
For example, Schiff has famously repeated that "Americans are broke." It's true that if nearly all Americans had no net worth, the impact on the US economy would be colossal. No argument there. But what percentage of Americans are broke according to Schiff? Is it 25%, 50%, 75%? Schiff never says. But some percentage-range estimate should be absolutely essential in basing his dire predictions (of collapsing spending/demand). The fact he makes only the sweeping generalization that "Americans are broke" (all of us?) is quite telling. Obviously a great many Americans own lots of net assets (over and above dollars, which he claims will lose their value). In a similar vein, on his radio show he said that "very few" Americans have any home equity any more. I'd like to know what his idea of 'very few' is -- 10%? 20%? 'Very few' in any case is obviously way too low since huge numbers of homeowners who bought their homes before the housing boom of the last several years still have equity from having bought considerably lower, and also from years of paying down principal. Similarly, virtually all homeowners who bought before the last decade or so have <i>considerable</i> equity (unless they've taken out a large home equity loan). California, Florida, Nevada and Arizona were hit very hard by falling home values (2007-2009), but many areas such as parts of the Midwest, where I live, have suffered only modest declines and certainly "very few" homeowners having equity and "Americans are broke" does not describe a huge chunk of the country's population. My statement that you quoted refers to the need for Schiff to qualify such statements with some numbers to justify his predictions.
quote from richard moheban.
Joined: Sep 2009
4/25/2012 @ 2:09PM |455 views
British Economic Austerity Bombs As England Double Dips Into Recession
+ Comment now
David Cameron is a British politician, Leader of the Conservative Party (Photo credit: Wikipedia)
Over the past year, I’ve watched with wonder as American conservatives have grown increasingly comfortable with their narrative deriding our European friends as an oppressed people living in a socialist hellhole.
To hear GOP leaders tell the story, Europe’s only true remaining value is to serve as a warning to good Americans everywhere that a life of croissant, kippers, long summer vacations and government run healthcare will surely turn us all into communists. They warn that continuing to allow our socialist president to take us down the European path will lead to us to become the American collectivist society.
There is, however, one thing about Europe that the GOP has found very much to their liking – European style economic austerity.
Since the moment English Prime Minister David Cameron instituted his government austerity program in the belief that taking huge sums of money out of the British economy would get England back on more solid financial footing, American conservative leaders have been fawning all over their Conservative Party counterparts—if not the actual nation that the British Conservatives lead.
Today, the report card is in and the results are clear—the GOP has been backing the wrong horse…again.
Joined: Sep 2009
by Fareed Zakaria
European concerns about deficits and debt are valid. But it was a mistake to use these medium- and long-term problems as a reason to make massive spending cuts in the middle of the worst economic slowdown in 80 years. Government policy at its best is countercyclical: You cut in boom times and spend during troughs. Europe is doing the opposite, and the effect is to worsen budget deficits. In most European countries, spending cuts have led to slower growth, lower tax revenue and thus bigger deficits. Spain and Britain are running deficits well in excess of earlier projections.
Joined: Sep 2009
Austerity drives Greece, Ireland, Portugal, Spain and now Britain into recession. Next?
How austerity policies and stimulus policies affect the GDP
The financial experts had expected the U.K. to eke out a teensy bit of economic growth in 2012. But the Office for National Statistics reported Wednesday that the British economy contracted for the second consecutive quarter, registering a 0.2 percent decline in annualized Gross Domestic Product for the first quarter of the year on top of the 0.3 percent GDP decline in the fourth quarter of 2011. The killers came from the biggest drop in construction in three years and in industrial production.
They call what's happening a "technical recession" as a result of the back-to-back two-quarter loss, just as they call what's happening in Spain a "technical recession." Technically, it's weasel wording. Britain, Spain, Portugal, Greece and Ireland are all now in recession. The Netherlands and France have not yet succumbed, but weak economic data have roiled their governments, contributing to the collapse of the Dutch parliamentary coalition and French President Nicolas Sarkozy's loss in the first round of voting over the weekend.
Behind it all is European austerity policy, the very stuff Republicans in the United States have been promoting for the past three-plus years. If they'd won the election in 2008 and imposed their proposals, you could add the U.S. to those nations who are now seeing so much economic damage. Indeed, it is unlikely the U.S. would have emerged from recession as it "technically" did in mid-2009. The policies the GOP objected to, particularly the economic stimulus package put forth and barely passed by Congress shortly after Barack Obama took the oath as president, have made a big difference even though they were not nearly as vigorous as truly needed to deal with the depth of the Great Recession. The GDP chart above shows the difference.
Now, as Joe Stiglitz makes clear in an excellent interview in The European, GDP is not the best measurement of people's well-being since it keeps going up while workers keep getting bit in the behind. (There's a discussion in bobswern's diary.) But there is still a big difference in what's happened in the United States and Europe over the past few years.
As my colleague Laurence Lewis wrote this past weekend, "Austerity is a disaster." Just as its tentacles have spread across Europe, the backlash against it is spreading as well. Whether (and how fast) potential replacement governments in France and the Netherlands and perhaps Britain itself can reverse the slide is anybody's guess. But it's increasingly clear that the people in those countries, and in Spain where youth unemployment is a stunning 50 percent, are fed up with the imposition of austerity on everyone but the people who brought on the financial crises in the first place.
Joined: Sep 2009
I understand that those believing we were going to experience high inflation these past years are
loathe to revisit their mistaken beliefs
Joined: Sep 2009
Soros on Austerity in Europe
Jan. 25, 2012, 9:51 a.m. EST
Soros: Austerity fomenting Europe tensions
Germans have been traumatized by inflation, billionaire says
By Polya Lesova, MarketWatch
DAVOS, Switzerland (MarketWatch) — Billionaire investor George Soros warned on Wednesday that the austerity Germany wants to impose on other euro-zone nations “will push Europe into a deflationary debt spiral.”
Germans “have been traumatized by inflation and they don’t understand the threat that deflation can cause,” Soros told reporters at the annual meeting of the World Economic Forum in Davos. “There’s a shift in German thinking recognizing this isn’t working, but we’re quite far yet from abandoning this emphasis on inflation as the only threat to stability.”
The euro zone’s sovereign-debt crisis is a major topic this year, with German Chancellor Angela Merkel due to give the opening address this evening and European Central Bank President Mario Draghi set to speak later in the week.
Investors are closely watching talks between debt-laden Greece and private-sector creditors in which the two sides are trying to agree on a writedown of Greek debt that will be voluntary.
“The big issue is how does the euro cope with the danger of a Greek default,” Soros said. “Because that is something that is looming — it may or may not be avoided.”
Soros, an outspoken billionaire and philanthropist, gave a speech on the euro crisis and then took questions from reporters on a wide range of subjects, including China, the U.S., Russia, the Swiss franc and oil prices.
Soros, who has written a new book on financial turmoil in Europe and the U.S., said that measures taken by the European Central Bank in December have relieved the liquidity problems of European banks, but “they did not cure the financing disadvantage from which the highly indebted member states suffer.”
High risk premiums on Italian and Spanish bonds threaten the capital adequacy of banks and leave weaker euro-area nations “relegated to the status of third-world countries that became highly indebted in a foreign currency,” he said.
Instead of the International Monetary Fund, “Germany is acting as the taskmaster imposing tough fiscal discipline,” Soros said. “This will generate both economic and political tensions that could destroy the European Union.”
The billionaire investor said that fiscal discipline alone isn’t enough to solve the crisis and that the EU will have to provide stimulus to get out of the deflationary spiral. “This will require euro bonds in one guise or another,” he said.
Click on link at top of page to read whole article.
Joined: Sep 2009
Europe's Austerity Plans Face Growing Backlash
by ERIC WESTERVELT
Spanish protesters gathered in Madrid on Saturday as the country's economic problems continued to worsen. The country's banking system is seen as particularly vulnerable.
text size A A A May 14, 2012
A political crisis in Greece and economic woes in Spain are again raising concern about the future of the eurozone.
In Athens today, Greek politicians tried again and failed to form a coalition government, though talks are ongoing. There is growing fear that Greece will not be able to remain in the currency union and avoid defaulting on its debts.
In Spain, the health of the banking sector is in doubt as street opposition to painful budget cuts continues there and in other parts of Europe. Tens of thousands took to the streets in Madrid and several other Spanish cities in peaceful protests against deep budget cuts and other austerity measures.
In downtown Madrid, Jose Antonio de le Gala, a 28-year-old physician, watched from the sidelines and lamented the painful fallout from the real estate bubble that burst. "Most of people thought we can grow forever, and that's not possible," he says. "If you grow, there's a moment that the economic situation is going to stop, or is going to go wrong. For years, most of the people has lived in a way that they couldn't maintain."
German Leader Suffers Another Blow
In Germany, Chancellor Angela Merkel's conservative CDU party took another hit in regional elections this weekend.
The eurozone is the Titanic and they just struck an iceberg and they haven't realized how profoundly damaged they are below decks.
- Simon Johnson, economist at the Peterson Institute, speaking about Europe's financial woes
This time the loss was in the country's most populous state, North Rhine Westphalia, where the CDU's share of the vote was off more than 8 percent compared with 2010.
The big winners were the Social Democrats and the Greens. The emboldened opposition is now likely to press for new growth measures to compliment Merkel's strict austerity prescription.
In Brussels, EU finance ministers are meeting, with Greece, Spain and the deepening eurozone crisis topping the agenda. Senior European politicians have kept up a steady stream of warnings for Greece to make good on its deep cost-cutting pledges or risk an exit from the euro.
"I am very concerned about the situation in Greece. This is a defining moment for the country," said European Council President Herman Van Rompuy. His comments only seemed to highlight a growing disconnect between the official thinking in Berlin and Brussels and what's actually happening in Athens and Madrid.
Greeks voted overwhelmingly for parties that have vowed to fight the budget-cutting program. Polls show parties opposed to austerity would do even better if a new voting round is needed, which seems increasingly likely.
Deep Underlying Problems
Former IMF Chief Economist Simon Johnson, now with the Peterson Institute for International Economics, says the loud political and popular backlash against austerity shouldn't mask the reality that the Greeks — and the currency bloc — are in serious trouble.
Spanish police officers carry off a demonstrator as he and others are evicted from a square in Madrid on Sunday.
"The European Union and the eurozone is on the brink of a total disaster [of] which Greece, by the way, is just the beginning. It's just the tip of the iceberg, if you like," Johnson says. "The eurozone is the Titanic and they just struck an iceberg and they haven't realized how profoundly damaged they are below decks."
Gloom was the order of the day. The German magazine Der Spiegel reported that the EU is exploring how to provide funding for Greece even if it leaves the eurozone. The goal would be to limit the financial contagion and keep it from devastating other countries in Europe.
"I'm not sure now what you can do to save Greece. That sounds terrible but sometimes countries need to default," says Mark Hallerberg, who directs the fiscal governance center at Berlin's Hertie School of Governance.
Joined: Sep 2009
Would you know admit that you might have been wrong in expressing appreciation for Englands Austerity program?
What do you think of the backlash in the world against these austerity programs which Paul Krugman correctly pointed out
2 years ago were going to backfire on the countries putting them into place.
Joined: Jan 2009
Location: Ann Arbor, MI
Dependency breeds contempt. What do you think the masses would do when you take something away? They want what they want and will continue to vote out anyone who doesn't give them what they want. That's how a Nanny State operates. The real question is if the problem will go away? And the real answer is "not likely". It has nothing to do with Krugman, and I wouldn't call it "backfiring" at all.
Originally Posted by Havakasha